The Mojave Water Agency (MWA)sets water policy and water rates for a desert area that faces a severe water shortage.It has 200,000 customers who are charged $100 per month for the first 20,000 cubic feet (cu.ft)and 1 cent per cu.ft thereafter.The average customer bill is $200 per month.It costs the agency ¼ cent per cu.ft to monitor and bill for usage.The MWA wants to cut costs by replacing metered billing with a flat fee which would be added to each property owner's real estate tax bill.Which is true?

Question

Quizplus · Accepted Answer

The proposed policy will be cheaper to operate because it eliminates the cost of monitoring and billing for usage. However, it will likely lead to increased water usage since customers will no longer be charged based on their actual consumption, removing the financial incentive to conserve water.

The Mojave Water Agency (MWA)sets Water Policy and Water Rates